We, as American simpletons, know that allowing our government to sell our sovereignty to the global loan sharks has diminished our national security. What happened to this simple premise inside the Beltway? I personally think they just don’t give a flying rat’s a** what happens to us, and they have purposefully put America in this position (both parties).
* China says U.S. must control deficit as economy recovers
CURRENCIES | BONDS
* Priority for world economy is to stabilise Europe
* External pressure will delay yuan reform (Adds fresh quotes from Zhu, graphic link)
By Chris Buckley and Aileen Wang
BEIJING, May 20 (Reuters) – Europe’s debt crisis has laid bare the fragility of global finances and the United States, too, must tame its fiscal deficit, a senior Chinese official said on Thursday, spelling out Beijing’s concerns before talks with Washington.
With China facing U.S. criticism for yoking its currency to a de facto dollar peg, Assistant Finance Minister Zhu Guangyao shifted attention to Beijing’s own worries about the euro zone’s woes and Washington’s rising indebtedness, ahead of the two countries’ Strategic and Economic Dialogue next week.
China wants “quiet discussions” about exchange rate issues, and loud lobbying will only delay movement on the yuan, Zhu told a news conference.
“External pressure and noise will do nothing but slow the reform process,” he said of the yuan exchange rate.
The global economy’s priority should be to steady financial conditions in Europe after Greece’s debt crisis, Zhu said. The United States also needs to control its fiscal settings, he said.
“The European sovereign debt crisis is a challenge not just for the countries that are party to it, such as Greece. In fact, it is a challenge to the stability of the entire international financial market,” he said.
“We have noted that President (Barack) Obama and Treasury Secretary (Timothy) Geithner have stressed they are paying attention to the problem of the excessively high U.S. fiscal deficit”, Zhu said, noting that it was also “a matter of concern to China.”
“We hope that the U.S. fiscal deficit will fall as a proportion of GDP as the economy recovers and reach a sustainable level,” said Zhu.
The U.S. budget deficit hit $1.4 trillion in 2009, roughly 10 percent of the economy. The White House projects the deficit this year will reach $1.6 trillion.
Chinese Vice Premier Wang Qishan, a leading economic decision-maker, has had many “frank exchanges” with Geithner about the U.S. debt burden, said Zhu.
Wang and Geithner will lead the economic discussions at the U.S.-China dialogue in Beijing on Monday and Tuesday. Zhu has been heavily involved in preparations for the talks.
China wants to improve coordinating economic policies with the United States as a buffer against global turbulence and would like the G20 group of nations to play a role in strengthening the global response, Zhu said.
China is the world’s largest holder of U.S. Treasuries with $895.2 billion. It added to its stockpile in March for the first time in seven months.
Chinese officials, including Premier Wen Jiabao, last year prodded the Obama administration to avoid pursuing fiscal policies that could erode the value of those treasury holdings.
Geithner will tell Chinese officials that the United States intends to get its deficits down but only after recovery is fully established, a Treasury official said on Wednesday.
CHINA SAYS PLEASE WHISPER ON YUAN
China has held its currency at about 6.83 to the dollar since mid-2008, trying to insulate its economy from the ravages of the global financial crisis, and drawing an outcry from U.S. Congress members and manufacturing groups, who say Beijing is unfairly tilting global trade flows in its favour.
Just one month ago, it looked as if the yuan would be the dominant issue at the strategic and economic dialogue between the world’s biggest and third-biggest economies.
The U.S. Treasury postponed a report on currency practices of key trade partners past a scheduled April 15 release, saying it wanted to explore the yuan issue further at the Strategic and Economic Dialogue and at G20 meetings next month.
But the debt troubles in Europe and signs of a stronger U.S. recovery have softened criticism of China’s policy and pushed back forecasts for any de-pegging.
U.S. Treasury officials and a Chinese central bank adviser have stressed that the meeting in Beijing next week will not be dominated by the yuan. Zhu said public sparring with Washington could shake markets already spooked by the Greek crisis.
“In the light of the many complex factors and many challenges facing world economic developments, we hope both sides will, as they have agreed, undertake quiet policy discussions on sensitive issues such as exchange rates,” he said.
Zhu would not be drawn into directly commenting on the exchange rate levels of the dollar. But he stressed China’s position that it was the overall stability of major currencies that mattered.
“We hope that in the course of together responding to challenges, the major reserve currency countries truly shoulder their responsibilities and stabilise the exchange rate relations between these currencies,” he said. (Writing by Simon Rabinovitch; Editing by Ken Wills and Kazunori Takada)